11 freight factoring terms every newcomer should know
The transportation industry has its own long list of acronyms, phrases and jargon. Whether you have been in the industry for five days or five years, it can be a lot to keep up with! Take a look at the list we have compiled to help you talk the talk:
- Accounts Receivable: Money that your customers owe your business.
- Operating Authority: A specified authority that allows professional drivers to haul specific load types to destinations.
- Bill of Lading (BOL): A receipt stating payment, shipment received and shipment contents.
- Cash flow: The total amount of money moving in and out of your business from income and expenses. Positive cash flow allows your trucking company to have money remaining after operating expenses to be used for stability and expansion.
- Concentration: The percentage a factor will fund a single customer in your portfolio. This is done to ensure that a single account does not represent the vast majority of your portfolio.
- Factoring: A financing method in which a trucking company sells its accounts receivable at a discount to a third-party funding source to increase cash flow. Also known as invoice factoring, invoice discounting, freight bill factoring or receivables financing.
- Federal Motor Carrier Safety Administration (FMCSA): The lead department of DOT that is responsible for regulating and providing commercial motor vehicle safety regulations.
- Net Terms: An arrangement in which payment is due within a specific amount of time, typically between 30-60 days after delivery.
- Want to learn the difference between recourse and non-recourse factoring? Click here.
- Rate Sheet/Rate Confirmation: Agreement between carrier and shipper on the load's end destination and cost.
- UCC (Uniform Commercial Code): A set of laws that govern the law of sales and commercial transactions.
- Working Capital: A measurement of liquid cash available in a business.
Love's Financial is here to help you navigate the world of freight factoring! Give us a call today to learn more or check out our freight factoring terms for beginners here.